2 Abstract Companies marketing their products and/or services overseas are faced with the decision of whether to standardize or adapt their product offerings. This decision concerns firms commencing to market their products in foreign countries as well as those already operating internationally and is considering expanding into further markets. The standardization of products across cultures is increasingly becoming an important issue that the managers of global firms are today facing. As international marketing in the 21st century receives significant research attention, it seems the cost benefits and administration of standardization strategies has simplified the international marketing approach as well as being an attractive choice for many firms. On the other hand, product adaptation strategies are also being considered as perhaps the most influential aspect for Multinational Corporations (MNCs). Seeing that past research has established that standardization enhances performance outcomes, more recent theories suggests that this may not always be the case. In today's globalized world, the choices of standardization versus adaptation of international products are no longer being seen as an inflexible choice. Instead, combinations of the two options are being regarded, given the dependent factors at a given time on a given market. However, with the emergence of homogeneous (identical) markets worldwide, it is still a question of whether MNCs will or will not intermix both the standardization strategies and adaptation product strategies. To that effect it would perhaps be more interesting to look beyond the dichotomy of standardization and adaptation as product strategies, that is not necessarily comparing which is the better option of these two comparisons. Through a single case study of a multinational fast food retailer McDonalds Company, a research agenda was placed on investigating the level of adapting or standardizing of products by Multinational Corporations (MNCs). Based on the illustrations and findings of the research, it was concluded that the choice of either complete standardization or adaptation is not an all-or nothing proposition, but a matter of degree. Hence MNCs should strive to incorporate ingredients of both approaches based on a clear understanding of the dynamics of the served markets respectively. Key words: Standardization, adaptation, culture, product, global, international i

3 Acknowledgements Writing this thesis during the past ten weeks of spring 2012 has been a process of continuous learning and hard work. The process has been enabled by all our teachers who gave us great ideas through the different subjects we undertook. We wish to acknowledge and specially thank our supervisor Professor Akbar Khodabandehloo for his continuous invaluable support and professional timely advice in guiding our study. Thanks also go to our opponents who not only contributed with constructive critique but also consequently helped us to improve the quality of this study. We also hereby declare that this piece of work is indeed our own and that all the works of other persons has been duly acknowledged and to the best of our knowledge, this dissertation has not been previously presented at this University (Högskolan Väst) or any other for similar purposes. Nampungwe and Maria, 31 May Thanks to a Swedish Institute Scholarship, I was able to undertake a Masters Degree in International Business and being part of my research work here at Högskolan Väst (University West), this dissertation was produced during my scholarship period. I thereby wish to make special mention of the Swedish Institute for aiding my entire study program here in Sweden. Thanks to my partner Maria for your patience and the shared sleepless nights and uncountable headaches in writing and re-writing the paragraphs countless times as we cruised through the ten weeks. However, this cannot go without mentioning that all of my study efforts these past ten months of my entire study period are unreservedly dedicated to my beautiful son John Nsansa whose little giggles and smiles inspired me to go on and never give up and I also wish to thank my husband Jonathan whose unwavering support and encouragement has always fostered me to forge ahead and has always kept me sailing. I also thank God for his faithfulness, for this indeed is another one of my Ebenezers'. Nampungwe, 31 May I would like to thank my partner Nampungwe as well for your patience, dedication, great determination, support and positive thinking these past ten weeks! It was a pleasure and great experience working with you! I also like to thank my family and fiancé Alexander for their excessive support and boost when I needed in completing this year. Finally, great fully I thank God for being where I am today! Maria, 31 May ii

4 Abstract...i Acknowledgements...ii Table of contents...iii Tables/Figures/Appendices Index...iv 1 Introduction Background Problem discussion Research question Research purpose Delimitations Organization of the study... 4! 2 Methodology Clarification of the research purpose Research process Research philosophy Research approach Research strategy Sample selection criteria Data collection methods Validity and reliability of data collection Literature review Introduction Historical foundations of product standardization / adaptation strategies Standardization and adaptation of different elements of the product Why adaptation of products? Why standardization of products? Is standardization possible across cultures? Summary Research Hypothesis Empirical findings... 26! 4.1 Presentation of case study: McDonalds Company McDonalds core values McDonalds philosophy McDonalds mission statement Research findings Extent of product adaptation and standardization Differences between different markets Interpretation of results Analysis of the extent of adaptation and standardization Analysis of the differences between different markets Is standardization possible across cultures? iii

6 1 Introduction In the first chapter the authors present the general background to the study. This is followed by the specific problem discussion, which will introduce the research questions for this particular study. Furthermore, the purpose of the research is discussed as well as the delimitation of the study. 1.1 Background International marketing is becoming a major trend in modern business. To this effect, numerous studies concerning the consumer demand and purchase behavior for different products across national boundaries have been and are still being undertaken. According to Doole and Lowe (2008) international marketing is defined as the process of management responsibility in identifying, anticipating and satisfying customer requirements across international boundaries. They go on by mentioning that within international marketing, companies are involved in making global decisions in one or more variables of the marketing mix. Consequently, companies wishing to enter international markets are faced with the challenge of considering the options of whether to standardize or adapt the elements of their marketing mix, that is, four Ps (product, price, place and promotion). Interestingly, the concepts of product standardization and adaptation are not new ones in regard to global marketing strategies. Product standardization and adaptation empirical investigation were performed since the 1970s (Leonidou, 1996). Where, according to Doole and Lowe (2008), product standardization strategy refers to a uniform representation of all aspects of the product such as the quality, the materials been used, product name, and packaging for all markets, regardless of location around the world. On the contrast, product adaptation is when changes and special modifications are made in order to adjust to each market in question. In the last decades, business in general has increased and most companies have extended their product offerings across national boundaries and cultures respectively. The researchers have also observed that in the quest to maintain a market share in the escalating competition in international markets as well as to realize profits, multinational corporations (MNCs) are constantly faced with the challenge to remain economically afloat by deciding which product strategy to use as they enter and strive to survive in international markets. In addition, Czinkota and Ronkainen (2004) have pointed out that it is vital to note that companies have four basic alternatives when deciding to internationalize their products: i. Selling the same product everywhere; ii. Make changes and adjustments on already existing products for different markets; iii. Creation of new products for foreign markets; iv. Merging all differences from the markets into one product where this will be introduced as a global product. Moreover, despite the various interpretations of the motivations behind the choice of product strategy, one common theme is the challenge faced by multinationals to both national and cultural identity, a topic that has become popular in the field of international business and/or marketing. Therefore, as the product being part of the marketing mix it is crucial for the strategy to be analyzed with caution and finally conducted suitably across cultures. 1

7 1.2 Problem discussion When MNCs expand their products to international markets they have to consider the two approaches of standardization and adaptation in order to formulate their global product strategy. Following the increase in globalization, companies still struggle to decide as to which product strategy to employ in the different markets. In making such a decision, three main schools of thought have been discovered over the last decades as observed by Doole and Lowe (2008); Horska, E., Ubreziova, I. and Kekäle, T. (2007); and Keillor, Hausknecht and Parker (2001). These mainly advocate product standardization, adaptation or indeed combining both strategies. In their observation, Doole and Lowe (2008), point out that the standardization/adaptation discussion leads, at one extreme, a global approach in which everything in the international marketing activity is standardized in all countries as standardizing the various elements of the marketing process has the aim of scale economies in production thereby leading to improved efficiency. On the other extreme, they note that there is the concept of an approach in which an MNC has a completely different strategy for every single international market in which MNCs strive to adapt in order to address local differences and expectations. As the world becomes smaller and the markets are seen as being the same, others have been advocating a standardized product strategy as they view the market to be the same as it is increasingly becoming homogeneous. For instance, Mesdag (1999) argues that it is crucial to standardize as much as possible the elements of the marketing mix, as it is the main characteristic of global marketing. However, it is inevitable to note that in as much as global marketing may seem the solution to generate profits at lower production costs, cultures around the world are very different and as such consumer preference over products will vary. For instance, Horska, E., Ubreziova, I. and kekäle, T. (2007) find that products must differ more from the original, in several different ways, as the culture differs more suggesting that the differences in language, religion, education, material culture and aesthetics are what highly motivates MNCs to start an adjustment process in their marketing mix and especially their products. However in reality, both strategies seem to be considered and used at the same time. For instance, Keillor, Hausknecht and Parker (2001) consider a global product strategy where it is examined how far standardization strategy can be applied and where it is necessary to be adjusted and adapted to the local market. The authors also note that the adaptation part of the strategy may be influenced by the company characteristics, the market characteristics and the product characteristics. Is it then safe to say that the industry that the MNCs are active in is also a very important factor for the choice of the level of standardization and adaptation to be used in their international product strategy? Czinkota and Ronkainen (2004), mention that industrial products do not require an adaptation aspect while consumer goods highly require adaptation as they are more interrelated with culture. Hise and Young-Tao (2011) state that although there has been a great deal of attention paid by scholars to the topic of standardization/adaptation over the last three decades, a careful analysis of the relevant literature results in the conclusion that we really do not know much about it. In addition, Kotler & Armstrong (1996) state that "most research has only a limited perspective in that they deal with a single, nonglobal market. It is also noted that most studies have analyzed the characteristics of the actual product rather than the product as a whole. These studies findings show that the degree of the level of standardization and adaptation alters depending on the specific characteristic of the product." Consequentially it is said that MNCs choose to 2

8 adjust those characteristics that are less costly, easier to make, and prevent a competitive advantage of price in foreign markets (Kacker, 1972; Ward, 1973). Today, global marketing is much more of interest to academicians than practitioners and several arguments of whether to standardize or adapt a product has been a puzzling question with which international marketers have wrestled over the last decades. One such area of interest is the fast food industry that has expanded globally in recent years. The business of restaurants is, if nothing else, an uncertain endeavor to embark on, considering that food preferences vary across cultures. Also to consider are the ways in which these MNCs present their foods across cultures. For instance, the use of internet marketing also plays a part in which these foods are put across to both existing and potential customers. For instance, the manner in which the products are displayed on these company s websites is very critical. The colors used as well as the usability is also of great importance. Considering the attention accorded to the standardization/adaptation debate over the years, the objective of this study is thus to contribute a new knowledge to the already existing field of study as the aim is to investigate the extent to which the companies operating (the MNCs to be specific) in today s turbulent global business environment are favoring a product standardization or product adaptation strategy respectively. 1.3 Research question The attention given to this particular field of study has been of great interest to the researchers and having taken into consideration the problem discussion, the research questions are thus: 1. To what extent do Multinational Corporations (MNCs) in the fast food adapt or standardize their products internationally? 2. Are there any differences between different markets in relation to their product offering? 1.4 Research purpose Thus, the main purpose of this study is to investigate as to what extent MNCs go in either standardizing or adapting a product in international markets as well as to find out if there are any differences between markets in which the MNCs operate. By using existing theories, this study aims to amplify the understanding of this topic. The results of the study ought to further educate and hence furnish managers with information to base strategic decisions upon. In order to fulfill the purpose of this study, as well as to guide the direction of the research process, the study will focus on the following delimitations. 1.5 Delimitations This paper will focus only on the product from the marketing mix as it is seemingly widely affected from the two strategies of either standardization or adaptation. It is also worth noting that this study will not compare the two strategies, that is, product standardization and adaptation, as to which one is the best. Since the primary data will be obtained via observation from the website, the authors realize that elements such as taste and quality cannot be observed unless by physical tasting. Therefore only the following aspects of the product will be considered: 3

9 Features (webpage menu layout) Brand name Packaging 1.6 Organization of the study This thesis is composed of six chapters and outlined as follows: Chapter One After this introductory chapter, the authors present their research method in chapter two. Chapter Two is the method chapter and discusses the research method as well as to give a detailed outline of the research philosophy, approach, strategy and data collection methods to be used in the research. Chapter Three is the literature review and it will review previous studies on the subject of product standardization and adaptation in relation to the purpose of this thesis. Chapter Four presents the empirical findings in threefold. Firstly presents McDonalds as the case study, followed by the research findings as observed by the authors and thereafter the interpretations of results are given in relation to the reviewed literature. Chapter Five is the last chapter and it narrows down the research to the conclusions in accordance with the research questions as formulated in chapter one. Thereafter implications of both the theory and future research are given as well as recommendations for further topic expansion. These chapters are summarized as outlined in figure 1.6 below: Figure 1.6: Thesis outline Source: constructed by authors (2012) 4

10 2 Methodology This chapter will introduce the methodology that will be used, the strategy and approach of the research. This chapter also contains a discussion of the method used to collect and analyze data for the study. The authors decided to commence with a brief overview of the research purpose as earlier mentioned in the introduction, and then they will review the research process and how they subsequently lead to the collection of data. The research philosophy is also discussed as well as the research approach and strategy to be used in the study. 2.1 Clarification of the research purpose According to Saunders et al. (2009: ), the classification of research purpose most often used in research methods' literature is the threefold one of exploratory, descriptive and explanatory. Further, the authors suggest that exploratory research is a valuable means of seeking new insights and to assess phenomena in a new light. It is particularly useful if a researcher wants to clarify the understanding to a problem of the study. Saunders et al. (2009) also advises that there are three main ways to conduct exploratory research. These are: i. a search of the literature; ii. interviewing "experts" in the subject; iii. Conducting focus group interviews. They further cite, "...flexibility inherent in exploratory research does not mean absence of direction to the enquiry. What it does mean is that the focus is initially broad and becomes progressively narrower as the research progresses". Moreover, Saunders et al. (2009) explains that descriptive research may be an extension of, or a forunner to, a piece of exploratory research, or more often, a piece of explanatory research. They cite the objective of the descriptive research as "to portray an accurate profile of persons, events or situations" as it is necessary to have a clear picture of the phenomena on which the researcher wishes to collect data prior to the collection of data. Lastly but not least, Saunders et al. (2009) explains that studies that establish causal relationships between variables may be termed explanatory research. They point out that the emphasis on this type of research is to study a situation or a problem in order to explain the relationship between variables. However, although the research purposes are different, Saunders et.al (2009) suggest that it is often beneficial o combine different types of research purposes. Thus, the main purpose of this study is to investigate the extent to which Multi National Corporations (MNCs) adopt either product standardization or adaption strategies across cultures as well as to investigate any differences between different markets in relation to McDonald's product offering. Hence, this study deals with multinational companies selling fast food products internationally. To reach this understanding of the occurrence of product standardization and adaptation the study will therefore mainly be that of a descriptive one. However, in aiming to improve the understanding of the aspects of both product standardization and adaptation strategies, the researchers will also employ some exploratory aspects in the study. 2.2 Research process In order to obtain the data needed to answer the research questions, the researchers have adopted four of the six processes of the research onion process as by Saunders et al. (2008:138). 5

11 Figure 2.2: The research onion Source: Research Methods for Business Students, Saunders et al. (2009: 138) This study has adopted the research philosophy, research approaches, research strategy and finally the data collection methods. The reasons are given in the following paragraphs Research philosophy Research philosophy refers to the systematic search for existence, knowledge, values, reason, mind, and language. This research requires an open mind in order to establish facts to both new and existing mysteries. Saunders et al. (2009:109) points out that upon embarking on a research, one develops knowledge in a particular field. Further, the research philosophy one adopts contains important assumptions about the way in which one views the world. These philosophies as explained by Saunders et al. (2009) are as follows: i. Positivism is an ontological position which something can be positive, truthful or known. ii. iii. Realism is the belief that reality exists unconventionally of observers. Interpretive states that as people interact with the world around them, they create and associate their own subjective and inter-subjective meanings. iv. Pragmatism philosophy is concentrated on the connection of practice and theory. Hence the pragmatism philosophy will be adopted as the study strives to understand the practical implications of deciding which product strategy to use in relation to differences in cultures as regards the purposes of the study. According to Saunders et. al (2009), pragmatism philosophy entails the researcher to stress practical consequences and values as standards by which the validity of concepts are to be determined. This emphasizes that there is an element of what constitutes acceptable 6

12 knowledge in the field of study, that is, the general understanding that practical criteria of knowledge and meaning and value is accepted in general. They further cite: "...pragmatism is intuitively appealing, largely because it avoids the researcher engaging in what they see as rather pointless debates about such concepts about truth and reality...you should study what interests you and is of value to you, study in the different ways in which you deem appropriate, and use the results in ways that can bring about positive consequences within your value system." These assumptions will underpin the research strategy and the qualitative research method that the authors have chosen in that; it is believed that it will be of practical benefit to relate theory to the actual reality surrounding the specific research problem. By considering the research method, the most important contemplation is the study s research questions as the authors strive to examine the level of standardization and adaptation of McDonald s choice of strategy used in their products internationally in relation to the cultural differences across national boundaries Research approach Saunders et.al (2009) points out that there are two main types of approach to a research. These are the deductive and inductive approaches as explained below: i. Deductive approach involves the development of a theory that is subjected to a rigorous test it is a dominant research approach where laws present the basis of explanation, allow the anticipation of phenomena, predict their occurrence and therefore permit them to be controlled. Hence this approach, allows the research to establish a hypothesis by using theory. The researcher to confirm or reject the hypothesis to resolve issue collects variety of data and information. ii. Inductive approach is the reverse of deductive approach as the observation of events is made before the theory is made. This is a flexible approach because there is no requirement of predetermined theory to collect data and information. The researcher collects the data before theory is made after the analysis of the same; hence the researcher uses observed data and facts to reach the tentative hypothesis and define a theory as pre the research problem. This helps the research to give inductive arguments. To this effect the authors have chosen to use the deductive approach, as the nature of the research is that of a descriptive one. In carrying out the study, it has been adopted a model as of Bryman and Bell (2011:11). Upon reviewing the literature, the authors intend to draw up a theory and a hypothesis. Thereafter collect the data and upon interpretation of data, subsequently accepting or rejecting the hypothesis of the study. Upon the revision of theory, the authors will then answer the previously stated research questions. The research approach model as adopted from Bryman and Bell (2011) is illustrated as outlined below: 7

13 Figure 2.2.2: The process of deduction Source: Adapted from Business research Methods, Bryman and Bell (2011) Research strategy According to Saunders et al. (2009:141), the choice of strategy is guided by the research questions, objectives, the extent of existing knowledge, the amount of time and resources available, as well as the researchers' own philosophical underpinnings. There are various research strategies that can be employed and these are: i. experiment: to study causal links; ii. survey: associated with deductive approach and obtained by using questionnaire administered to sample, popular in descriptive and exploratory research; iii. case study: research which involves an empirical investigation of a particular contemporary within its real life context using multiple sources of evidence; iv. action research: four main purposes of research- research in action as purpose of research, involvement of practitioners in research, diagnosis and clarification that results should inform other texts; v. grounded theory: theory building through a combination of induction and deduction to predict and explain behavior; vi. ethnography: researching a phenomenon within the context in which it occurs and in addition not using data collection techniques; vii. Archival research: makes use of administrative records and documents as the principal source of data whether exploratory, descriptive or explanatory research. 8

14 Saunders et al. (2009) further emphasize that no strategy is inherently superior or inferior to the other. Consequently, what is most important is not the label that is attached to a particular strategy, but whether it will enable the authors to answer the particular research question(s) and meet the objectives. Yin (2003) further suggests that there are three criteria used in the selection of research strategy these include: i. Form of research question ii. The extent of control an investigator has over behavioral events iii. The degree of focus placed on contemporary events. In addition, when case strategy has been chosen the researcher can choose between single case study and multiple case studies. Yin (2003) also points out that a single case study is employed when the researcher aims to test one case against theory allowing for deep research, in order to test numerous variables. On the other hand a multiple case study is when the researcher compares and contrasts cases increasing validity and allowing for comparison and generalization. Table 2.2.3: Relevant situations for different research strategies Source: Adapted from Yin (2003:5) Based on the form or nature of the research question of this study, the research will adopt a case study strategy since it will concentrate on one specific company (McDonalds) for the empirical evidence, which will be based on real life context. The authors rationale in the choice of strategy lies in the research agenda that is based on investigating why MNCs employ product standardization or adaptation strategy and how they implement this. Further the case study does not require control over behavioral events such as interviews. The case study focuses on contemporary events in relation to the current debate of choice of product strategy that MNCs employ in international markets. Case study strategy For the purpose of completing this study the authors have chosen a case study based on a multinational corporation operating in the fast food industry, that is, McDonald s. Reasons being that it is a well-known multinational corporation and both secondary and primary data are readily available in relation to the specific study. Ideally it would be better to choose a multiple case study to enable increased validity and allowing for comparison and generalization. However, seeing that the study will be carried out within ten weeks, hence due to time constraints and available resources, the authors have since decided to use the single case study as the main 9

15 strategy to carry out the research. The case study will also be of particular interest as the desire is to gain a rich understanding of the framework of the research. The authors chose this company to be a real life example and to draw conclusions through investigating the motivations behind the choice of product strategy made by the company in international markets. As is noted by Saunders et al. (2009:146) "The case study strategy also has considerable ability to generate answers to the questions 'why?', as well as the 'what?' and 'how?' questions, although 'what?' and 'how?' questions tend to be more the concern of a survey strategy...consequently if you are using a case study strategy, you are likely to need to use and triangulate multiple sources of data. Triangulation refers to the use of different data collection techniques within one study in order to ensure that the data are telling you what you think are telling you". In addition, Wallgren, L. (2007) cites: "Results derived from a case study are not possible to measure statistically since it is only based on one or a few case objects. Additionally when a case object is selected you do not search for cases, which can generate a general population. Instead a search for case objects should be executed in order to supply sufficient amount of information, which increases the understanding of your research." Further, Saunders et.al (2009) suggests that case studies entail attempts to explain the relationships that exist in certainty, very often in a single organization. To this the authors suggest that reality can be captured in greater detail by an observer or researcher, with the analysis of more variables than is typically possible in experimental and survey research. However, the authors point out that case studies can be considered weak as they are typically restricted to a single organization and it is difficult to generalize findings since it is not easy to find similar cases with similar data that can be analyzed in a statistically meaningful way. In addition, different researchers may interpret the same data differently, consequently adding research bias into the equation. Thus, the objectives of this research that will therefore allow the use of a case study are hence: 1) To answer the following research questions: i. To what extent do Multinational Corporations (MNCs) adapt or standardize their products internationally? ii. Are there any differences between different markets in relation to McDonald s product offering? 2) To interpret the data collected in order to uncover the answer(s) to the research purpose as discussed in the introduction of the thesis Sample selection criteria In choosing the sample for the online survey, the authors considered the websites presented in the English language. English language has become the international language that can be understood and spoken through almost everywhere in the world today, therefore have made this a primary criteria in the choice of the countries to be investigated for ease of observation in relation to the study. Consequently, all countries that have chosen to examine have their menus presented in the English 10

16 language, which makes it easier for understanding and comparison for the use of this particular study. As the other criteria based on the choice of the countries was a country from each continent that McDonalds operates in. As McDonalds is a multinational company, which operates in most countries all over the world, it was considered as a good choice for a case study for this research since most people are familiar with the company, its global success, and its products. Another criterion was from the authors personal experience that is, realized differences and slight modifications in their products offered around the world. Hence, the intention was to examine further in the level of standardization/adaptation of their global product strategy. Therefore, the countries of focus for the data collection include six countries as follows: USA, Canada, India, Australia, South Africa and England. Considering that the United States of America (USA) is the country of origin for the product of interest, each menu collected will be compared with the USA menu. When the data is collected and compared with the USA menu, the authors will then investigate for similarities (standardization in the global product strategy) and for differences (adaptation in the global product strategy) in their product line for each foreign market. Due to time limitations as mentioned earlier, the authors have chosen to base the study only on the product from the marketing mix. The McDonalds full menu consists of 121 (one hundred and twenty one) products and as such, the products under study will only consist of the burgers and/or sandwiches and the elements this study will examine are product features (layout on the webpage), product brand name and product packaging Data collection methods Having presented a theoretical framework upon which this study is based to direct the research investigation, two forms of data will be gathered. These are secondary and primary data. i. Secondary data These will include but not limited to, textbooks, articles, journals and previous academic research such as theses. The research will rely mostly on secondary data as this will give the researchers a basis to explore and familiarize their concept with already existing research regarding the problem in the study. ii. Primary data For the empirical evidence, the data that is going to be collected and use in order to answer the research questions will be based on McDonald s products offered in five chosen countries. These will include online surveys from the official webpage of McDonald's company. These data are relevant to the research as the intention is to test the level of standardization and adaptation product strategies that international companies employ across cultures. Since the primary data collection method is by observation, a data observation guide (as compiled by the researchers in appendix A) will be used. This will serve as a guide in obtaining relevant data and thus, the observed data will consequentially lead to the findings of the research which will in turn be analyzed in relation to this study s research questions. 11

17 2.3 Validity and reliability of data collection The validity of data is the extent to which data collection method(s) can accurately measure what they were intended to measure. The reliability of data is the extent to which data collection technique(s) will yield consistent findings, similar observations would be made or conclusions reached by other researchers or there is transparency in how sense was made from the raw data (Saunders et al., 2009). According to Yin (2003) four tests have been founded in order to test the quality of the empirical study. These tests are as follows: i. Construct Validity: creating operational measures for the concepts being studied. ii. iii. iv. Internal Validity: creating a causal relationship, which means; that certain situations are revealed to lead to other situations, as distinguished from unauthentic relationships. External Validity: creating the area to which a study s findings can be generalized. Reliability: demonstrating that the processes of a study for instance, the procedure of the data collection is able to be repeated and conclude with the same outcomes. Table 2.3: Case Study Tactics for Four Design Tests Source: Adapted from Yin (2003:34) As regards to the data collection concerning validity, Yin (2003) states that construct validity test is challenging in a case study. Seeing that this research s data collection is based on an online survey from the different countries that McDonald's operates in, this entails that the data collected are focused on the WebPages, which is one source of evidence and subsequently resulting in a problem for the first test. However, the second test internal validity is not applicable for this research s data analysis as Yin (2003) points out that this test is applicable to explanatory case studies where the 12

18 researcher attempts establish casual relationships. On the other hand, the third test of the external validity centers around the use of theory is a vital aspect of this paper s research design. Having similar case studies in relation to this thesis, the authors believe that the collected data will provide strong support for future theory reference. In terms of reliability concerning the data collection, the authors can relate their study to Yin s (2003) model in that, the data collection can be proven when the same process of data collection through an online observation survey based on the same five chosen countries in this paper, is done by different researchers and the same outcomes are concluded. It is therefore hoped that the data that will be collected will indeed measure their intended purpose such that similar conclusions will be reached as compared to other researchers in the same field of research. 13

19 3 Literature review The literature to be reviewed in the study will be the theory concerning the two product strategies, which are standardization and adaptation with emphasis on cultural differences respectively. The authors then summarize their understanding on the same as regards the reviewed theory and end the chapter with a research hypothesis surrounding the research problem. 3.1 Introduction The long debate in international marketing as to whether companies should standardize or adapt their international marketing approach and market entry methods continues to be a focus of research in academic literature (Vrontis et al., 2009). With the general increase in globalization, it is hardly surprising that the study of motivations of MNCs in deciding which product strategy to use has attracted considerable attention in recent years. In an attempt to go beyond the dichotomy of product standardization and adaptation, assumptions about the two contrasting theories studies have focused mainly on cultural differences. While some research has focused only on the advantages and disadvantages of either strategy, others have also suggested a future possibility of standardization as being the sole product strategy across cultures. The theory selected in the following paragraphs give an insight into the study as they give the various perspectives on previous studies in relation to the research topic. But in order to understand the concept of going beyond the dichotomy, it is crucial to fully understand the concepts of culture, standardization and adaptation as regards to the product strategies as per the decisions of Multi National Corporations (MNCs). 3.2 Historical foundations of product standardization / adaptation strategies Although there are some isolated examples of the historical foundations of product standardization and adaptation, a few researchers have shed some light over the same. "From an evolutionary perspective, marketing thought, and its strategic focus, has developed from simple production and product related strategies to more outward oriented strategies placing greater emphasis on consumer and societal needs For example, the production era of in the UK and the USA was characterized by the advent of mass production and the increase of market supply focused on minimization of costs. This not only provided lower priced products domestically, but for export markets as well. However, as economic conditions deteriorated during the global depression firms made a strategic marketing shift from being simple suppliers of low cost products to product innovators, and then to advocates of their products within the market. As such, the underlying positioning of a firm during the period incurred a shifting asset base from machinery and output to human resources capable of persuading the customer that the firm s products would fulfill the customer s needs, i.e. a focus shift from products to customers....during this growing internationalization initiative, practitioners became widely split over the international standardization issue. Whereas Brown (1923) viewed humanity as possessing common attributes, thus allowing for standardization, Propson (1923) argued that adaptation was often necessary to appeal to divergent local markets" (Ryans, J.K Jnr, Griffith, D.A & White, S.D 2003). The researchers further cite: The theoretical foundations of the standardization/adaptation debate center on the perception of consumer homogeneity and/or the movement toward homogeneity. Those researchers who view markets, or consumer wants and needs, as being homogeneous 14

20 argue that the standardization of advertising is more effective as it allows for the lowering of costs, via economies of scale, and thus increasing margins for a firm. Alternatively, those who view markets as being heterogeneous, and therefore containing consumers with differing consumer wants and needs, perceive greater value delivery via adaptation. A final comment from this article is worth repeating. In an article to analyze the global marketing and the case for international product standardization, Whitelock, J. (1989) observed that during the 1970s the potential savings for product design were considered to be "not as great in consumer-packaged goods as compared with other businesses, such as those in the consumer durable or in the industrial goods companies". In other words, one would expect to find greater standardization in consumer durable goods since greater cost savings associated with standard product design would be realized. 3.3 Standardization and adaptation of different elements of the product General business across national boundaries entails that products are marketed to suit the targeted international markets. This entails that products are marketed to the respective cultural preferences. According to Hofstede (1984), Culture is the collective programming of the mind, which distinguishes the members of one category of people from another. For the purposes of the [study], culture is defined as the shared patterns of behaviors and interactions, cognitive constructs, and affective understanding that are learned through a process of socialization. These shared patterns identify the members of a culture group while also distinguishing those of another group. Cultural dimensions are basic concepts that help us understand how two or more cultures might be different or similar along each dimension. Cultural differences result from the variation given to different values. Conflicts and misunderstandings occur when members of a group take the view that their values are correct and best (Phatak et. al., 2009). Because the purchase of food items is strongly driven by cultural factors, consumer tastes, habits, and incomes, the interest of this study is solely in the product element of the marketing mix. The marketing mix according to Doole and Lowe (2008) consists of the 4 Ps; Product, Price, Place and Promotion as marketing strategies. "McCarthy (1975) formulated the concept of the 4P's-product, price, promotion and place marketing mix. For many years these have been the principle foundations on which a marketing plan is based" Vignali (2001). Further, "the elements that are more affected by adaptation in foreign markets are the quality, the features, and the namely design" (Baalbaki & Malhotra, 1993). Product refers to the goods and services that are offered to a company s customers. Distant from the physical product itself, other elements associated with a product include what the customers may be attracted to, such as the way it is packaged or in the case of food how it tastes. Other product attributes include quality; options; physical features; supporting services; brand name and warranties offered. Thus, these product elements are further illustrated as part of the 4Ps marketing mix in figure 3.8 below. 15

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